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TMI Blog2020 (11) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is prejudicial to the interest of the revenue. As the assessment order is in accordance with the ratio laid down by the Hon ble jurisdictional High Court, thus, we are of the considered view that in the light of the judgment of the Hon ble jurisdictional High Court, Ld. Pr. CIT was not justified in invoking the provision of section 263 - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... culture land has been purchased on your name. the said lands have been purchased on the name of your sons and daughter in law. Hence the claimed deduction should have been disallowed as per provisions of Section. 54B of the I.T. Act. The AO has not examined this factor and no enquiry/investigation has been made. Therefore, the assessment order passed by the AO appears to be erroneous in so far as it is prejudicial to the interest of the revenue. You are therefore, required to show cause why provisions of section 263 be not invoked in your case for the reasons mentioned above." 3. In response thereto, the assessee filed written submissions through its Authorized Representative (AR), CA, Satyanarayan Agrawal. However, explanation offered by the assessee was not found acceptable by the Ld. Pr. CIT, he therefore, held that the assessment order dated 27.03.2017 is erroneous in so far as also prejudicial to the interest of the revenue on account of passing of the order without making requisite enquiry/investigation in respect of deduction u/s 54B of the Act . He, therefore, set aside the assessment order and directed the assessing officer to re-examine the issue afresh after causing nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereby, fresh notice u/s 263 was issued in the name of legal heir of the deceased Shri Jitendra Patidar dated 31-10-2018. B]The appellant in the present appeal has taken the following grounds of appeals before the Hon'ble Bench:- 1.1] That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the assessing officer under section 143[3] of the Act by invoking the provisions of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous nor prejudicial to the interests of the revenue. 1.2] That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the assessing officer by invoking the provisions of section 263 of the Act even when the order was passed by the assessing officer under section 143[3] of the Act after conducting necessary enquiries and after due application of mind 2] That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the assessing officer by invoking the provisions of section 263 of the Act without properly appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so eligible under section 54B of the Income Tax Act. 1.5] That the assessee was an old man at the time of sale/ purchase of land. He died on 06-05-2017. That it was not in dispute that the amount as invested in the name of his sons was also from the sale proceed of the land as received by the assessee. The amount as invested in the name of his son is also eligible for deduction under section 54B of the Act. 1.6] That it is now stand settled in favour of the appellant, that if any agricultural land is purchased in the name of the spouse of the appellant, in the name of his son's and also in the name of his son's wife is eligible for deduciton under section 54B of the Income Tax act. 1.7.1] Detail of land as purchased by the assessee in the name of his family members are as under: S.No Name of the person Relation Cost Expenses Total cost [Rs] 1 Jitendra Patidar Son 10,19,000 71,855 10,90,855 2 Jitendra Patidar Son 16,45,000 1,16,150 17,61,150 3 Nitesh Patidar Son 31,54,000 2,22,555 33,76,555 4 Nitesh Patidar Son 21,11,000 1,49,060 22,60,060 5 Divya Nitesh Patidar Sons' wife 51,66,000 3,64,230 55,30,230 1,40,18,850 1.7.2] The amount of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) as well as by the Tribunal that the assessee is entitled for exemption under section 54 of the Act. 3.6 The assassee sold a property at Bangalore and purchased a property at Anna Nagar in the name of his wife is only a question of fact. It is a settled law that the factual findings of the Tribunal cannot be disturbed in exercise of the powers under section 260A of the Act vide M. Janardhana Rao v. Jt. CIT [2005] 273 ITR 501 (SC). Hence, we do not see any question of law much less, substantial question of law arises for consideration. Accordingly, the first question fails and the same is rejected." 1.9.3] That Hon'ble Jurisdiction High Court in the case of Pr CIT Vs BalmukundMeena [ Appeal No ITA 118/ 2016 dt 16-02-2017 ] has held that refer paras 3 & 4: " ________ We have heard the counsel for the revenue and gone through the aforesaid impugned order. In our opinion, from the impugned order, no substantial question of law is arising for consideration of this Court as the ITAT while recording a pure finding of fact has dismissed the appeal of the revenue. Undisputedly, in this case the assessee had sold the agricultural land which was being used by him for agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife and children. The revenue authorities have also accepted the claim and allowed by Ld.CIT(A) made by the assessee for purchase of agriculture land in the name of the assessee as well as his wife. The other two remaining persons are assessee's son and daughter. We do not find any reason that why the benefit should not be given Raja Ram Patidar ITA No.371/Ind/2015 A.Y. 2010- 11 71 for purchase of agriculture land in the name of his son and daughter who are not someone not connected or strangers to the assessee and as held by the Hon'ble High Court that the assessee includes his legal heirs also so as to give the vide and legal interpretation. We therefore are of the view that the Ld.CIT(A) erred in denying the exemptions u/s 54B of the Act to the assessee for investment of sale consideration for purchasing agriculture land in name of his son and daughter at ₹ 49,86,085/- and ₹ 12,50,175/- respectively. We accordingly set aside the findings of both the lower authorities and direct the Ld. Assessing Officer to give the benefit of exemption u/s 54B of the Act to the assessee at ₹ 62,36,260/- which is over and above the benefit of ₹ 91,18,190/- already all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 2 - For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 2.3.1] That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of agricultural land purchased situated at Gram Nignoti, Indore for ₹ 22,60,060/- in the name of NiteshPatidar 6 Copy of registry dated 28-08-2014 in respect of agricultural land purchased situated at Gram Nignoti, Indore for ₹ 55,30,230/- in the name of DivyaPatidar 2.5.1] That in the view of above, assessing officer has examined all the submissions placed before him and passed the assessment order only after conducting necessary enquiry/investigation and after due application of mind in the facts of the present case. Hence the order passed by the assessing officer was neither erroneous nor prejudicial to the interest of the revenue. 2.5.2] Therefore, in the view of above,the Ld Pr. CIT was not justified in setting aside the assessment order as passed by the assessing officer by invoking the provisions of section 263 of the Act, when the order was passed by the assessing officer under section 143[3] of the Act after conducting necessary enquiries and after due application of mind. 2.6.1] That Hon'ble Supreme Court in the case ofMalabar Industrial Co. Ltd. CIT [2000] 243 ITR 83 (SC) after considering the decisions of Rampyari Devi Saraogi (supra) and Smt. Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open". [ Emphasis supplied ] 2.6.3] Hon'ble Ahmedabad Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective. Thus, the reversionary proceedings u/s 263 of the Act are not validly initiated in view of the facts that the issues raked up by the Pr.CIT stand examined by the AO in the assessment proceedings and the ld PrCIT has failed to state as to how the order of AO is erroneous and not in accordance with law or settled legal position. Even on merit, the assessee is entitled to all the deductions/claims as per the provisions of the Act. Considering all these facts in totality and respectfully following the ratio laid down in the various decisions of the Jurisdictional and other High Courts, we are of the considered view that the jurisdiction by the Pr.CIT u/s 263 of the Act was invalidly assumed. Accordingly we set aside the proceedings u/s 263 of the Act as being invalid and also consequent order of PCIT u/s 263 of the Act. [ Emphasis supplied ] 2.6.5] These principles have been re-iterated by the Apex Court in its judgment in Commissioner of Income Tax vs AmitabhBaccahan[2016(3) KLT SN.4 (C.No.3) SC], where the court inter alia held thus:- "There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r enquiries. Accordingly, the Tribunal was justified in reversing the order passed by the Commissioner. 2.6.8] That Hon'ble High Court of Madhya Pradesh in the case of Bakir Singh Vs Commissioner of Income Tax as reported in 2013 40 Taxmann.com 128 has held that :- 10.1 In the present case the AO during the course of original assessment proceedings made the enquiries relating to cash deposit and even the case was selected for scrutiny on the basis of deposits in the bank account. The assessee furnished the bank statement and source of agricultural income from 184 Bighas agricultural land. The AO examined those documents and on being satisfied, framed the assessment under s. 143(3) of the Act vide order dt. 16th Sept., 2011. Therefore, a possible view was taken by the AO. So it cannot be said that the AO had not examined the issue on the basis of which the learned CIT has held that the assessment order dt. 16th Sept., 2011 passed by the AO was erroneous or prejudicial to the interest of the Revenue. In the present case, it is noticed from the copy of the order sheet of the AO during the assessment proceedings (placed at page No. 14 of the assessee's compilation) that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal of the assessee is allowed. 2.7.1] The order as passed by the assessing officer was not erroneous, since, the view as taken by the assessing officer was one of the possible view on the basis of documents as furnished by the assessee. Hence, the order as passed by the assessing officer was not erroneous and prejudicial order. 2.7.2] That Hon'ble Apex Court in the case of CIT Vs Max India Limited as reported in 295 ITR 0282 has held that: -[Page No. 62 of the compilation] " 2. At this stage we may clarify that under para 10 of the judgment in the case of Malabar Industrial Co. Ltd. (supra) this Court has taken the view that the phrase "prejudicial to the interest of the Revenue" under s. 263 has to be read in conjunction with the expression "erroneous" order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, when the ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 54B of the Income Tax Act. The order as passed by the Ld Pr CIT under section 263 of the Act therefore requires to be quashed. 4. Ld. counsel for the assessee has also placed reliance on the decision of this Tribunal rendered in the case of Shri Sukhram Mukati vs. ITO in ITANo.409 & 410/Ind/2014 vide order dated 09.08.2017. Ld. counsel for the assessee submitted that the facts are identical. However, the Hon'ble High Court of Rajasthan in the case of Kalya vs. CIT 251 CTR 174 (Rajasthan) has held that word 'assessee' used in Income Tax Act needs to be given a legal interpretation and not a liberal interpretation. If the word 'assessee' is given a liberal interpretation, it would be tantamount to giving a free hand to the assessee and his legal heirs and it shall curtail the revenue of the Government, which the law does not permit. Ld. counsel for the assessee submitted that the facts in the present case are distinguishable as in the present case he sold his ancestral property. No objection was obtained from the assessee in respect of his rights to be transferred by father of the assessee. Ld. counsel for the assessee further submitted that the jurisdictional High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 are required to be invoked. Therefore, the assessment for A.Y.2015-16 framed on 27.03.2017 is hereby set aside to the file of AO to re-examine the issue of claim of deduction u/s 54F, indicated in the preceding discussion u/s 263 and passing an order as per the law after making necessary verification, inquiries and investigation. It would be not out of place to mention that the AO shall re-examine only the issues which have been indicated for further investigation in the preceding discussion." 6. It is settled position of law that the provisions of section 263 of the Act can be invoked when twin conditions i.e. the assessment order is erroneous and prejudicial to the interest of Revenue are satisfied. In the present case under the identical facts the Hon'ble jurisdictional High Court has ruled in favour of the assessee regarding availability of deduction u/s 54B of the Act where the investment in new asset is made in the name of son of the assessee. The revenue has not brought to our notice any contrary judgment by the Hon'ble jurisdictional High Court or Hon'ble Supreme Court as a binding precedence. Therefore, under these facts, it cannot be construed that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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